Key highlights

• The company reported net sales of Rs 34.40 crore and loss of Rs 4.86 crore for FY'09. The management has earlier indicated a sales of around Rs 52 crore with breakeven at the EBIDTA level. However, during the year, there was a reduction in scope of activities of Guru Govind Singh Refinery order, which resulted in reduction of execution of around Rs 28-30 crore of orders and its profits. Further all the legacy orders were fully executed and completed and all possible losses have been booked in the year. From FY'10 onwards there are no more legacy orders.

• For Q1 FY'10, the company reported net sales of Rs 25.63 crore, up by 244% and a PAT of Rs 0.45 crore as against loss of Rs 1.32 crore for Q1 FY'09. The OPM stood at 4.8% in line with management guidance of 5% EBIDTA for FY'10.

• The order book as on Mar'09 stood at Rs 248 crore, which will be completed within 18 months, and large part of the orders will be booked in this year itself. All the orders were received by the company on its own, without any intervention of Tata Projects, which holds 75% stake in the company. Tata Project continues to assist the company financially by providing term loan of Rs 20 crore and LC and Bank Guarantees to banks.

• The order book includes EPC order of Rs 22 crore from Kuwait for cross country pipeline, Storage tank orders from Guru Govind Singh Refinery order of Rs 165 crore and Storage tank order from IOC Panipat refinery of Rs 22 crore.

• Tata Projects in JV with Artson has bid for around Rs 400 crore of orders which includes Cairn Energy Oil & Gas EPC order of Rs 200 crore in which the JV is L1. One of the reasons for acquiring 75% stake in Artson is Artson's efficiency and skills on EPC contracts of Oil &Gas and Hydrocarbon contracts. The scope of work includes, storage tanks, preparing and handling fuel pumps, fittings for oil & gas and other hydrocarbon projects etc. Tata Power with Artson's efficiency can grab a chunk of orders in EPC segment of Oil & Gas and Hydrocarbon sector which is one of the focus segments of Tata Projects as a whole. Further Tata Projects have also formed a JV with Engineers India known as ETPL for such EPC orders of Oil & Gas and Hydrocarbon particularly for Middle East and Gulf region contracts. Artson is one of the preferred vendors of Engineers India but because of its liquidity issues, was not able to get the orders. Subsequently it has been mutually decided by Engineers India and TPL, that the Consultancy part of JV will be undertaken by Engineers India and EPC related work of that consultancy business will go to Artson. The remaining entire EPC work of JV will be performed by TPL, and further it will outsource some of the work to Artson where the Arston experience and skills will be used. So overall it is a win win situation for Arston. However, first target for TPL and for Arston management is to get out from BIFR.

• The board of BIFR has given a target of FY'11, where by the company needs to overcome from its entire accumulated losses of Rs 17 crore and come back to profits and get out from BIFR. The management is very positive about achieving the target within due time.

• Of the total order book of Rs 248 crore, around 15-18% are international orders and rest is all domestic orders. Because Artson is under BIFR, it is not eligible for many PSU and private Oil & Gas and Hydrocarbon contracts. However, HPCL and Mittal for Guru Govind Singh refinery has specifically allowed Artson to perform and show the expertise. This contract of Rs 165 crore is a big hope for the company to prove its stand and come out of the trouble. Further while domestic orders are of EBIDTA margin of around 5%, the international orders are of EBIDTA margins of around 12-14%. After execution of Kuwait order of Rs 22 crore of cross county pipeline, the company expects some major order having double digit margins, by Dec'09 from Kuwait and Qatar region.